The American Worker's Wage Isn't Growing Much

The employment cost index (ECI) increased by 0.6% in Q4, which
was in line with the 0.6% expected by economists.

However, this was a slightly smaller increase than in last
quarter, when the ECI increased by 0.7%.

As a result, the latest data suggests that wages and salaries
rose at a slower pace in the fourth quarter than in the third
quarter.

And that's just another indication that workers haven't been too
successful in getting pay increases even while the labor market
is improving (which we previously saw with the
surprising fall
in average hourly earnings in the December jobs
report).

ECI is a
broader measure that includes other forms of compensation besides
hourly pay (for example: commissions), as well as benefit costs
(which are more than 30% of labor costs).

"There's
still a lot of slack in the labor market,
mostly because of the low participation rate
and recent drop in the labor force," Nariman
Behravesh, chief economist at IHS Inc.
in Lexington, Massachusetts, told
Bloomberg before the report. That
is "continuing to put some downward pressure on
wages — not that they're falling, but they're
not going anywhere, either."

In other
words, a weaker ECI number reinforces the idea that wage gains
remain muted.